Omaha Daily Bee Newspaper, July 19, 1902, Page 4

THE OMAHA DAILY BEE: SATURDAY, JULY 19, 1902. RAILROAD TAXATION IN COU Arguments of Counsel on the Issues Raised in the Mandamus Case Before Nebraska Supreme Courte=rart IX. Argument for the respondents by J. E.| Kelby of the Burlington law department @8 amicus curiae | 1t the court please, I advantago myself of the courteous invitation of this hon- | orable court to present my suggestion upon the questions that arise upon the record in this case. 1, for the time being, will lay aside that | yoke of which my friend Howe writes in | his brief; that yoke about mu Bave learned 8o much and carried so long | when he was general counsel of the Omaha | road, and become, for the time belvg, a reinfranchised spirit. I hall appeal to this eourt simply upon the process of rea- #on alone. That was a magnificent dem- enstration on the 1ith day of May last, when that great cavalcade, composed the general manager of the “public " of this state, on the cne hand, and Bis eminent counsel on the other, who, with heads high {n the air like a Norman sped down the halls of this capitol, went | Before the Board of Equalization and bom- bastically demanded that It asscss the franchises. - DId Mr. Simeral undertake to tell the board at that time what a fran- chise was? No. Has he undertaken to tell the court at this time what a fran- chise is? No. He préterred then, as now, to prate learnedly about soverefgnty, about the eminent domain power, about the axercige of a franchise, about its value boing worth $200,000,000, and left the board 88 he has left the court—in the darkness n which he found it. That is what Simeral and Rosewater did, and Mr, Simeral knows as much today, and Mr. Rosewater and Mr. Howe, and Mr. Harrington, know as much today about the nature and inherent characteristics of tranchise as the board dld. And I have no doubt that my friend, the good, honest old Stueter, when he heard the word sov- erelgnty, thought it was some sort of a gift to the railroads of this state from Emperor Willlam or King Edward. Nel- ther Rosewater nor Simeral tried to ex- plain #. Mr, Simeral, In whom reposes all wisdom; Mr. Harrington, who has made s study of this thing for months and years last past, and Mr. Rosewater, who has rung the changes on this thing for thirty years, never told the board what a franchise was; and they cannot tell. They have not told and will not be able to tell this court what a franchise is. s this not a remarkable proceeding? It is an event. Tt is more. It is an epoch. For thirty long years Mr. Edward Rose- water, this same custodian of the ‘public morals and the public weltare of this state, has stood by year after year, has seen the Board of Equalization of this state make its assessments relatively to all other property, and has never once protested ex- cept this time. Is the assessment any dif- ferent thls year than it was last year relatively? No. Has Mr. Harrington pro- tested heretofore? No. Mr. Rosewater protested on behalf of himself and, if you will belleve him, for the republican party, and it became necessary for the self-con- stituted representative of the other polit- fcal party to do likewise; and this they dld, and thus they act in concert so that the republican party shall not have a monopoly of the protest business. That s thelr purpos The people of this state are not protesting; they are attending to their business. Théy are satisfled. They are not here tb protest. They have asked no onme to protest for them. They cannot protest, have no cause for protest and do not protest. This protest is, after all. nothing but alry persifiage on the part of the relators and their counsel. They have no cause for protest. They showed and show no grounds for protest. They are simply n here for the sake of stirring up trouble. Now, my friend Howe asks me to tell this court what a franchise is. That is a difficult thing, but I am golng to try to throw some light upon that much abused term. It may be that my own definition will not be satisfactory to the court, as it may not be satisfactory to my own mind, which means that the average man, even of trained intellect, cannot fairly determine fn his own mind the component elements that enter into the thing. Now, Black- stone says that “a franchise is a branch of the royal prerogative subsisting in the hands of the subject by grant from the Xing;” Kent, “that a franchise is a privi- lege conferred by grants from government and vested in private individuals.” Apply- ing these definitions to modern time we would say that a franchise may be a grant conferred by government through the legislature on bodles corporate or in- dividuals. Now, if your honors pieas it is con- celved that there are two kinds of fran- chises and those may be denominated primary and secondary. A primary fran- chise may be sald to be that which in- heres in the act of becoming a corpora- tion, in the right or privilege of becoming an artificlal entity. A secondary franchise 1o e grant unto the body corporate or to the Individual which in its nature is prop- erty per s A franchise may be conferred on an indi- vidual as well & corporation, for cer- tainly there is nothing In the comsfitution or the laws of this state which prohibits the legislature from conferring grants upon individuals; and section 1 of article ix of our constitution seems to contemplate that individuals as well as corporations may own, enjoy and use a franch The very words used In that section denote that proposition as “‘all persons, properties and corporations shall be taxed in proportion to the value of his, her or its property and franchise”” Now if there be reason and philosophy in the law (and we doubt not/ but there are) the franchise which I have denominated primary is a grant which vests fa the individuals of which the corporate entity 1s composed, It is & perpetual grant to them and not a grant to the artificial entity, The best proof of that fact is that the corporation itself by no deed of which h of | wel- | eT——— THE LATEST COMBINATION It Interests the Ladies. This Is the age of combives and we read dally of mew combinations of capital, but up to the present we have not heard of anybody trying to monopolize the cereal world and combining it inte one grand dish. ‘We learn, however, that this nas been ac- mplished by an expert chemist and food specialist, who has combined in a T istylog and appetizing manner the selected portions of pine of the best known cereals, nuts, vegetables and frults, and in suc proportions as to form a “balanced ration™ or perfect food. While the produc: is without & peer as & health or breakfast food, the pecullar feature conceraing it is that it s used successfully In the waking of ples, puddings, salmon or veal loaf, cro- quettes and & bundred more dellcious dishes. Mrs. Nell McAuliffe, the famous demon. strator of pure foods at the Pan-American Exposition, is thoroughly enthused over this latest production and wishes to meet the ladies of Omaha all this week at the | grant | also conveyance could allenate the franchise, certainly without express statutory sanc- tion; that is something that can only be conveyed away by the members of the tor- poration. Before a corporation ean have capacity recelve or be capable of accepting a it muet exist and therefore the con- stitution seems to have reference to those grants which are conferred upon corporate bodles already in existence, that are per- forming the functions such as are enjoyed by and conferred upon local utility compans les corporations are by our constitution and laws authorized to be created, they are doubtless intended to be and to exist upon to | equal terms, within their mission, with In- dividuals. As the patural person fs en- dowed by nature with certain rights, eo is it Intended, certainly within the place where they are incorporated, that the artificial person shall have like rights with. in the sphere in which they are authorized to act. The individual s born of nature; the corporation of the legislature; both are equal in & commercial sense. If, therefore, the primary franchise, that is, the permis- sion of the legislature to the individual to exist and be as an artificlal entity, is a privilege conferred upon the members who compose the unfty rather than upon the unity itself, how can the legislature author- ize that privilege to be taxed? It is clearly not an asset of the corporation itaelf, which 18 clothed with neither control nor dominion over it. If there is any virtue in this proposition it is that peraons as well as bodies ccr- porate may possess, own and enjoy fraa- chises that are the essence of property, and as such are exclusive in their nature. Such are those grants to street rallways, gas, telegraph and electric light companies. These rights are exclusive. They ara in the nature of vested rights which cannot during the term for which granted be in- vaded or disposed of by the legislative In respect of these purposes for which | stitutions of every state, were well advised power. At common-law franchises of this character were exclusive. I mean those franchises, such as privileges to collct tolls trom the operation of bridges or fer- ries. They naturally excluded contiguous competition. All grants of this kind were 80 construed as to give them due effect by excluding all other persons from particl- pating in the privilege, whethet under an alleged later grant from the soverelgn or otherwise; and any attempt on the part ot any other person to trench upon the rights grauted, as by operating a ferry or bridge in competition, was denominated a nul- sance which the law very soon abated. From the long recognition of the exclu. siveness of such rights has undoubtedl grown up the doctrine of “vested right so-called. The right, therefore, in a local utility company to operate, for example, a railway on a public street or streets, is an exclusive right, a franchiso that is prop- erty, that can be sold or assigned, is a most valuable right, one that is taxable such. My proposition is then, that a franchlee of this sort s the franchise required to be taxed to the Individual or corporation. The mere right to do the business for which the corporation is organized is surely not & thing to be taxed. For it you tax the cor- poration upon that right you immediately destroy the element of uniformity com- manded by the constitutfon, The right to o business is not property and therefore not taxable. If you tax the manufacturing corporation upon the right to do business you at once permit it to be destroyed by competition. For in that case the corpora- tion would be paying a tax which would re- sult directly In the diminution of its prof- its as compared with the profits of the in- dividual, and this cannot be. If a corpor tlon be created for the purpose we will say of selling dry goods, and invests in that business $100,000 which is denominated cap- ital, and it sells $500,000 worth of dry £00ds each year and makes a net profit of 16 per cent, that profit would be reflected| perhape in its capital stock so as to appre- ciate it 15 per cent, or $115,000. Were you to tax It on the basis of capital stock at market value you would tax it as $115,000, while In the case of the individual in the same business with the same capital gro- ducing the same profit, you would impose the tax on the value of the merchandtse on a particular day, thus using one rule for the corporation and a different rule for the fn- dividual. Surely, such a course s inequ ity itselt and a violation of our law and constitution. You do not tax the individusi upon his earnings; but you attempt to tax the corporation upon its earnings. But if this view be entirely fallaclous, it it be without basis in logie, we are not meces- tly driven from our position, for after all If it be determined that the right to be, the right to act, the right to do business, is a franch'se, then we insist that that right has been assessed by the Board of Equali- zation in this case. The property of rallroads in this state s by statute designated for the purpose of taxation as personal property. A franchise is personal property and, following the language of our statute in sections 39 and 40, it is personal property used first in the construction, and afterwards in the suc- cesstul operation of the road. It s, in other words, the use of the road itself. You need it as much in the construction as you do in the operation, and therefore it is included within this section 49. Now, if your honors please, I want to call your attention spe- cifically to the language of this section, and 1 read: The number of miles of such ratiroad and telegpaph lines in each organized county in e state and the total number of miles in the state, including the roadbed, right-of- way and superstructures thereon, main and sidetracks, depot bulldings and depot grounds, section and tool houses, rolling stock and personal property necessary for the construction, repairs or successful gperation of such raliroad and telegraph Now, your honors would necessarily give full intendment to the expression of the legislature In performing the duties which the constitution epjolns upon it. They were required by section 1 of article ix to provide a mode or manner for determining the valuation of rallroad property. We in- sist that the enactment of these two sec- tions are falrly intended to and must be construed as giving effect to the require- ment of that section of the constitution, and that included in this is the so-called fran- chise or the right to be and exist, the right to collect toll and the right to operate the raliroad The matters generally involved in this case have been very caretully gone over by my brothers Baldwin and White, and it ought not to be mecessary for me to g0 over them again, except to briefly refer to them. In this case it is charged that the board falled to consider and ass franchise. If, as & matter of I tion, they did ae cause it was their tranchise because it was personal property of the rallroad company required to be sessed by them—personal property which inhered in every part, in every wheel, in every tle, In every particle of coal con- sumed and ticket and money collected— then they considered it, and If as a matter Boston Store, maln floor, treating them to & plecs of Per-fo ple and having . ttle heart-to-heart talk about Per-fo, thls lat- est combloation. of law they did consider and assess it then this element of fraud melts entirely away; these is nothing of it left, constructive, legal or otherwise. There is not any charge ia the motlon for the writ, or in the writ itself, that in the matter of cqualizing, bis board acted unfairly or dis- | honestly not consider the franchises which were of a particular value. 'Therefore, there Is | no allegation here that they did not con- sider the fair relative value of all rallroad property, and with that element out of the way there is no fraud charged in this case. There 18 nothing perhaps in modern days more complex for the purposh of taxation than raflroad property. 1 presume the tramers of our constitution and of the con- of that fact. Rallroads of modern times are no longer confined to one particular ate, but are made up of great trunk lines which penetrate dozems of states, and the difficulty of taxing these railroads fairly has been considered by the legislatures of every state, by the great economists of modern times, and the difficultles are still considered insuperable. Perbaps it was with that view of the case that the leglslature in enacting this particular section said: “You must assess and you are required to #s all the property of the railroad in- cluding the franchise, but we leave to you the formula by which that shall be accom- plished, that s for you." Now if this board has reached a fair and eatlstactory conclusion upon the thing com- mitted to its charge to be done, it is not for this court to review its action. It it has fairly responded to the requirements of this act, then its act is conclusive, and its judgment final unless reviewed in the manner pointed out by statute. The counsel for the relator insist that the proper methods by which to admeasure the valuation of railroads is by a considera- tion of their stocks and bonds. For this reason I have given some consideration to the stock and bond quotations or values of the Chicago, Burlington & Quincy Rallroad company, which operates a rallroad in this state. I belleve from a consideration or inspection of its annual report, that In 1801 it operated 8,374 miles. I understand that since that report was Issued it has added several hundreds of miles to that, at least that s the Information which I ob- tained by application to our auditor for that purpose. This report, which the re- lators have introduced In evidence, shows on page 22 the cost of the road and equip- ments. On the same page are made deduc- tions for stocks and securities held by this company issued by othier raflroads. Now, assuming that the mileage of this road is 8,374 miles and that the cost of the road is $288,000,000, the cost per mile on the basis of the number of miles that I have glven would bé $36,636—that would be for the entire system traversing the eleven states, made up of the expensive terminals in 8t. Louls, Kansas Oity, St. Paul, Minne- apolis, Chicago and elsewhere. That is the entire railroad from its beginning point to its ending point, and it only shows $36,- 600 & mile. I you take the capital stock at $110,677,700 and multiply it by 2, because they say this stock sold in the market for $200 a share, you get the sum of $221,155,- 400, and if you add to that the total bonded debt of about $111,000,000, which s the total bonded debt less the bonds held as repre- senting other roads, you get about $34,000 per mile when you divide by the number of miles that I have glven. So that by any theory that you may formulate, the ass: ment of the Chic Burlington & Quincy rallroad in this state, $4,300 a mile is an absolutely excessive assessment com- pared with the assessment of other property in this state. I have prepared here a number of tables on this proposition and I read from sched- ule A. You take the funded debt at $147,- 000,000 and the capital stock at par value, $110,000,000, and the total would be $267,- 000,000. Then you divide the total by the total number of miles, and you get a valuation per mile of $20,000. If you take schedule B, and take the stock at $192 per share (for it is a fact, as I un- derstand, that the great bulk of this stock sold for $192 per share, and only & small part sold for $200), you call it $193 a share. Then you get for stock $212,000,000, and you get the funded debt at $147,000,000, and it you divide that by the mileage above, on that basis you get a little more than $40,000 a mile. Now, your honors, there has been an ap- peal made here for the method of de- termining this value by the market quota- tions. The average value of the Chicago, Burlington & Quincy stock for the eleven years last past was a little over $102 a share. This is shown by the table which is found in the brief, and which is correct and shows the highest and lowest quota- tions for each of those years. How do you propose to get at the Industrial worth of the stock by using the market quota- tions? Suppose that on March 1 of any year the market quotation of stock is be- low par; on the 16th, par; on the 25th, $25 above par; on the 30th, par; on the day the board fixes the value, below or above par; is it going to ueo the quota- tion of those days If perchance it is be- low par, or will it rather ascertain the true industrial worth of the property it- self? My insistence is that you cannot got at the value by a consideration of the market value of stocks and bonds. After the Goggin case had been decided by the supreme court of Illinols—some two months after—the assessing board of that e, which had power to assess the rail- met and, in response to that dec fon equalized and asseseed the rallroad properties, and the result of that considera- tion has been introduced In evidence in this case, and that board after applying the rules and prineiples set forth in that de- cision, actually reduced the assessment as compared with the previous aesessment of the previous year. That was the asses ment of the raliroads in Illinols. The Chi- cago, Burlington & Quincy railroad, I think, was assessed at a little less than $8,000 & mile, including, of course, its expensive’ terminals in Cook county. The Chicago, Burlington & Northern Rallroad company, which s & proprietary line of the Chicago, Burlington & Quincy, was assessed, I think, at less than $7,000 a mile, and the asses: ment there was on & 20 per cent bas! the rallroad. If it is valued on & 20 pi cent basls, then the value of that ratiroad in Illinols was $42,000 or $43,000 a mil Now, speaking about the value of railroads, the Kansas City & Omaha llne was pur- chased mot long ago by the Chicago, Bur- lington & Quincy Rallroad company, it get- ting something ltke 200 miles of road in this state, and the purchase price was some- thing & little less than 36,200 a mile. Now, by what process of legal alchemy can th road which was bought less than a year ago at $6,200 a mile, be entitled to share in the higher valuation to which it has mot con- tributed of the Chicago, Burlington & Quiney? It you come down to the earnings basis, which we insist is unfair and unjust, the Chicago, Burlington & Quincy Rallroad company’s lines in this state ought to be assessed far below the present amount. The only line of eny importance may be sald to be the through line; all the other lines are chiefly feeders and branches, and thero ie not one of them earning more than $300 or $400 dollars a mile net money, and many of them are operated at a serious loss, as the reports of the auditor will show. Why of | hort address by Henry C. then should the roads in Nebraska be con- A sldered as cntitled to share the value of the property in other states? Missourl. Why should Nebraska be entitied to participate in thoss lines? Illinole 1s fed by lines in other states. Why should Ne- braska be entitled to share in that valua- tion? There is no cowrt and no economist has yet had the hardthood to say that the stock and bond. theory, or the market quo- tations of stocks and bonds furnishes a falr standard by which to measure the value of raliroads. I have brought with me here a Adams, on the valuation of railroad franchises. He 1s pro- tessor of political science, University of Michigan, and special expert on franchise uation for Michigan Tax commission. It 1s an extgact from his recent address before the National Conference on Taxatlon, held by the Civic federation at Buffalo. He says There are three reasons, as it appears to me, why the valuation of corporate prop- erty “according to the market value of its stocks and bonds fails to meet the re- quirements of a valld assessment. 1. In the first place, it must be recognized that the market value of stocks and bonds is influenced by considerations quite inde- pendent of the earning capacity of a prop- erty, and, to the extant that this is true, a tax on the busis of such valuation would fall to conform to the generally accepted rule of equity in asscssment. The value of a particular series of stock, for example, is frequently influenced by the desire of the promoter of a new organization to gain control of the property which they Tepresent, In which case the price he is willing to bid s influenced more by his estimate of the ultimate advantage to be gained from the contemplated organiza- tion than by the earning X\u( of the particular property purchased. The seller, on the other hand, demands whatever he thinks he can get. H! reasoning is no longer that of an Investor, but of a strate gist. He Is in a position to block the or. ganization and values his property accord ngly. This fact is so_familiar as 10 re quire no illustration. The market quota tlon of stocks and bonds also is frequently influenced by speculation even more than by considerations of investment. How, for example, could one arrive at the industrial worth of the Burlington, the Northern Pacific, the Great North or the Union Pacific’ by considering the market quota~ tions of the securities of these properties during the last three months? It is evi- dent that the stock quotations of Securi- ties do not, and from the nature of the influence 1o which they are exposed, can- not be acceded to as a test of the com- merclal worth of the properties which such securities represent. Were corporations to be taxed on the basis of assessment de- termined by the market value of Stocks and bonds it s itkely that those which are irdustrially weak, but strategically strong, would pay relatively more in taxes than those which are industrially strong, but strateglcally weak. The tax ought not in equity to be as- sessed to corporations on the basls of market quotations. It is the Investor valuation and not the valuation of the promoter or ine epeculator which should e accepted by the assessor as a guide in the valuation of corporate franchises. 2 The =~ second reason why market value of stocks and bonds cannot be ac- cepted as a safe basis of nu‘vralsul rest upon the claim that the franchise value of @& business is not a simple or homogeneous fact. Its analysis shows it to be made up of several elements, each of which, in equity, may be imposed with a different rate of taxation. This suggestion opens up a broad fleld of speculation which we can- not now enter, but I desire to make clear the meaning of this theoretical criticlsm and shall try to do so by & simple fllustra- tlon. The president of the American Steel company in his testimony recently given before the industrial commission explained the basis of the company's capitalization. The capital of the new company, it will b remembered, exceeds the aggregate capital of companiés organized by many millions ot dollars, and this increase in capitaliza- tion was defended on the ground that the new company controlled not only the pro- cess of manufacture, but the source of ma- terial to be manufactured; that this con- trol covered 8 per cent of the visible sup- ply, and that in the case of ore this visible surply at the estimated rate of consump tlon would last for sixty years. All th he claimed, was a sound asset of the com: pany and should be represented by capital, Admitting for the moment the accuracy of this presentation, and there is no reason to belleve that it falls to represent truly the situation, it is evident that the value of #0 much of the capital of this organization a8 represents its beds of iron and of coal depends upon the fact that this organiza- tion has monopolized the situatlon, Ordi- narily an iron mine which cannot be used for sixty years would have little present value, but this steel company, it will be ob- served, regards this future output as hav- ing a ‘present worth. It has placed upon the market a security which cannot be sup- ported by sale of product for sixty years and the only means by which it can’ float such a eecurity is to charge a price for the current output adequate to pay a dividend u})on a property which represents a process of manufacture that from tne nature of the case cannot be performed for two generations. It seems to me evident that the ability of this organization to float these excess se- curities is due to its monoply and not to its | assets, and the point I wish to make is | that euch a form of property ought to pay & higher rate of taxation than property which represents a current process of in- | dustry under conditions which guarantes | a falr price for services rendered. - If, now, the franchise of such a corporation 1s de- termined by the market value of stocks and bonds, the assessor s not able to dis- ulsh between these two classes of lue, and the legislature is not able to as- sign & higher rate of taxation apon the present worth of capital to a future prod- uet than it gns to the present worth of | the current product. I cannot escape the | conelusion that, insofar as the commercial | success of the so-called industrials de- pends upon thelr ability to control the prici to the consumer, the franchise value thus created should Be made the basis of spe- | clal taxation, and this cannot be done under the rule of valulng a franchise by tho market quotations of stocks and bonds. To | express It another way, it seems ess for the realization of that equity which all admit_should characterize the administra- tlon of the taxing system that the physical element in an industry, by which | mean its machinery and {ts plant, should he valued = separately from the nonphysical clement, that the nonphysical element it- self should be analyzed and a rate of taxa- tion imposed upon it in harmony with its commercial basls and fts soclal significance. Should this suggestion be admitted As sound there is no escape from the conclu- slon that, the appraisal of franchise valua- tion on the basls of the market quotations of stocks and bonds fails to conform to the most recent phase of industrial organiza- The third poiut is practically along the same line. Great stress is laid upon the proposition that rallroad companies are given the right to exercise the power of eminent do- main. That is a right which is absolutely essentlal to the existence of the corpor: tion, and without which it could not ac- complish the purpose for which it is called into existence. That right is valuable to a railroad in its inciplency, when it starts out to comstruct its road, but after the road is completed and has been In op- eration for years, and desires no longer to extend in any particular direction the right becomes suspended as it were; it is no longer valuable. But, predicated upon that right, the state assumes the power to regulate and control these corporations, and to prescribe’ and fix the rates which they shall charge for transporting persons and property, so that for the use of that power the raliroad company surrenders to the state more than the state gives. A great many other features of this case perhape sbould be gome into, but which time prevents, but I want to refer.to two or three decisions here as {llustrating the proposition for which I have contended, viz: that by section 39, the words “all property” includes the franchise. I read from the case of City of Detroit against Donovan, 23 Am. and Eng. R. R. Cases, 622; The legislature has provided that the track shall be assessed as personal prop- erty. In our opinion, this term should be construed Lo include not only the tracks Spikes, ralls and switches, but also the vlght to use the bed upon Which they are placed. The statute (subdivision 16, sec tion 8. Tax Law, 1 Comp. Laws, 1897, sec ton 3531) provides that the personal prop erty of & street railroad shall be assesse township, village or city where it business office is situated, an track, road or bridge of any such For instance, | All that is said is that they did | the Iowa fines are fed by the lines from | There wi company shall be beld to he personal property, and may be assessed in the town- #hip, village or ecity where the same Is located, used or laid. 1f the franchise I8 to be treated as a part of the road within this provision of the statute, attaching to_every part of It a and as was held in Detroit Ciiize Rallway company against Common Councll of Detroit, it seems clear that the assess- ment. should be made in the through which the railway run was declded In the recent unrepc of United Railway company against Boa of Assessors. As o the roliing stock, ete., the statute Is equally clear th. should pe assessed In the city g_r(m‘ipll office of the company | ‘hese are no part of the track, but per- sonal prop: It is contended that the determination of the assessing officer is, in the absence of fraud, final. If the gues- tion were whether the judgment of the | assessor as to value was final, we should ot hesitate to hold that his decision could not be reviewed collaterally. But the con- tention of the rallway company goes fur- ther. It contends that property not assess. able was In fact assessed. Under the stat- ute (1 Comp. Laws, 1897, section 359%) this inquiry seems to be open. (See also Pio- | meer Iron company against City of Ne- gaunee, 116 Mich., 430, 14 N. W. 700). The writ will be denled. 1 desire to read from the 32 Am. & Eug. R. R. caces, 658, entitled State v. Austin & |N. W. R. Co.: The statute requires all property to be assessed “at fts true and full vaiue,” and, in effect, defines that value to be what It Jould probably sell for at a voluntary sale for cash. | Fersons proposing to sell or buy & railroad, {n forming an opinion as to its yalue, would doubtless consider the condi- tion of its physical properties, but would uitimately reach their conclusions by a careful estimate of the probable net in- come which its operation would produce, There are no especial "rights and privi- leges belonging to or in any wise apper- taining” to the great mass of the real roperty of the state, such as farming ands and town or city lots; but the terms are applicable to the real estate of rallroad companies, and ggest the thought that the legislature had such prop- erty in mind when it inserted the provi- sion, and that it intended that, in yalilng a raflroad for taxation, the valua- tion should include every right and privi- lege which was exercised in producing its income, and that it was not intended to disassoclate the soul from the body of the living concern, and value by itself the lifeless remains. If we are correct In this conclusion, then it follows that it was not the Intention of the legislature to tax the franchise of a rallroad as & property sepa- rate from {ts real estate. To so tax It would lead to double taxation, which s not permitted. But there {s another consideration which gives strength to our conclusion. The statutes of many states impose a tax upon what Is called the “Intangible property’’ of raliroad corporations, and various methods have been devised by which the value of ch property may be ascertained; and it ems to us that, If it had been the pur- pose of the legislature to tax this charac- ter of property separately from that of the rafiroad itself, a method would have been provided by which such value should be determined. = Unless the property be valued as an entirety, this is the reasonable thing to do. The physical property of a rallroad company is of comparatively Iit- tle value, except for the uses for which it is acquired. Its so-called Intangible prop- erty is of no value without the raliroad and its equivalent. By the amended answer is shown, and that most conclusively, as we have rea- soned out in our briefs, that the board assessed everything that belonged to the zllrold companies in this state, the in- ngible as well as the tangible property— everything. The first answer filed was in the nature of a conclusion. It was simply an opinion of the members of the board that they had not considered the fran- chise. There is nothing in the act which specifically requires them to consider a franchise, as such, by the name fran- chise; they are only required to assess all the personal property of every de- ecription, which includes all property. When they were asked to say ultimately what they did, then they had no hesita- tion in stating that they did consider and assess those things which entered Into the aggregate of railroad property for use. I think this matter has been covered fully, and it is unnecessary to consume further time. townships and thi ted case a y Argument for the respondents by Mr. Ran- som, representing the Pullman Car company as amicus curlae: I simply want to call the | court’s attention as to the sleeping car | company. The record shows, as it has been made here, that there was no protest filed and no objection made to the manner in | which they ed the sleeping car com- pany's property. The record as brought in and put in evidence, shows that the board followed law precisely. It takes several pages in the record. It takes more pages in this record to assess the Pullman com- pany than it does all the rest of the cor porations. The record as made up by this board and introduced by the relator shows | under eections 40a and 40b, which are added to sections 89 and 40 and were passed since sections 29 and 40 were passed, that this board complied precisely and strictly with those two sections. Section 40a provides what return shall be made, and that return is here, and it takes more space and paper to make the return as to the sleeping car | companies than it does all of the railroad companies. It has itemized everything that the statute’ requires shall be itemized. | no protest filed and no evidence introduced except Poor's Manual, and that simply shows that this is a corporation or- ganized under the laws of the s:ace of Illi- nols and Is a manufacturing concer. Mr. Howe—The stock is worth 23v. Mr. Ransom—Why, it is worth 234, that 15, among people who speculate, but we have nothing to do with that. There s no stat- | ute in this state that authorizes ta:s board to assess a corporation such as this on its | stock. Why, in Ohlo, where they talk of | these express company cases, their statute ls nothing at all like ours. Our statute provides specifically how you shall as sleening car companies. The statute of | Ohlo provided how they should assess ex- press companies, and it, too, a page ror the legislature to lay down the rules by which | express companies were to be assessed, but it did not take more than ten lines ror the Nebraska legislature to lay down the rules by which the sleeping cars are to be as- sessed, and the rules are as different as daylight is from darkness. They want to impress upon this court that under the law of this etate you must assess the capital stock. Mr. Howe—I beg your pardon, so far as your company Is concerned, it is an impor- tant, almost a controlling item or impor- tance, to know an element, to show the value of the franchise under which thelr property 1s moved over our state. Mr. Ransom—Inasmuch as the supreme court of this state has decided that we have no franchi and that we are not com- mon carriers, and that we cannot be held as common carriers, I think that ought to dispose of that question. In the case of Lowe against Pullman Palace Car Com- pany this court held it was mot a com- mon carrler and its lability could not be fixed by the rules that fix the liability of common carriers. I suppose the court remembers the two sections, though it may not be so, as thelr attention has not been called to it. I do not suppose the ideas of anybody are going to be taken here as to what would be the proper method of sessment, if it in any way conflicts with the ideas of the legislature. This was com- mitted to the legislature as to the method by which this company should be ass®sed and the legislature has spoken on that and 1 expect, hard as it may be on some people, this court and everybody else will have to follow the rules laid down by the legisla- ture rather than some imaginary theories that may be advanced here by people that seem to be dissatisfied with everything. Here is the law and I will call it to the attention of the court, because in my briet and in every brief filed here, because the express company cases and the case of Backus against the railroad have been cited to the court. The revenue law was passed, 1 believe, in 1879, At that time sections 408 and 40b were not in the law and were not passed until 1889. Prior to that time there was sleeping cars run through this state, but there were no rules lald down by the legislature as to how they should be asseased. In Colorado they had the same kind of a statute, and in Hlinols they had the samo kind of statute and the courts of both of those states hold that it was the duty of the railroad company to return all cars that it used in the operation of its road, notwith- standing that the statute sald that they must return all property owned by them. That was the situation up to 1389 and, in order to Increase, perhaps, the revenue of the state, and in order that it might be certaln that the sleeping cars were belng taxed the legislature passed these two sec- tions and it takes all of this volume to make its return. Now, the rule is laid down in thia statute, and it is upon a mileage basis and they must assess the ears upon & mileage basls and there is nothing in that statute that authorizes them to assess any franchise. 1 want the gentleman to explain it he can what the Pullman company is doing in the way of service in this state that an in- dividual could not do. Is there any rea- son why an individual could not make the cars and hire them out to the rallway com- panies? What Is the necessity for being A corporation In order to make cars to loan them out? That is not a franchise. It don't move any car in this state. It has been stated here that this s a trans- portation company. Your honmors can re- member that not many years ago you had to show your ticket for your transporta- | tion over the road before they would let you Into a sleeping car; you could not go into one until you bad paid for your trans- portation. You could not eay to the at- tendant at the door, “I am going up on the train and will pay my fare.” They did not want the Pullman company to colleat any fare and they would not let them into the cars until the transportation was paid. That was a stipulation L..ween the rall- road companies and the sleeping car com- pany and it was one of the conditions upon which you could get extra accommodations afforded by the railroad company that you must first bave your ticket that would entitle you to ride over the road There is no franchise connected with it You or I or two or three of us might go into partnership and manufacture these cars. The manufacture of cars is ite prin- cipal business, as is shown by the author- itles clted here and I suppose is conceded here may be taken as evidence. In the 162 U. 8. and the 8th Colorado, which we cite here, they set out there under what ar- rangements these cars are furnished to the raflroads and show that it Is by virtue of « contract and show the compensation that the raiiroads pay for them and shows how much each one Is to get, and Poor's Manual that ie introduced here shows it is a man- ufacturing company, organized under the laws of Illinols under a special act of the legislature passed in 1867, and says that that is its business. I haven't any doubt it the rallroad companies should find out from these gentlemen here that this is a traneportation company that they will be- gin to look into thelr contracts and change them, because under thelr contracts the Pullman company cannot transport any- body; they simply must furnish the cars to the raflroad companies. 1 know we have taken up a good deal of time, your honors, but I want to call atten- tion to the fact that you may know that I have filed this brief here that states what the situation is as to this company. I clalm that under the law, that having no protest filed and no objection being made, and the record shows in this assessment they complied preclsely and in strict com- pliance with the statutes as to this com- pany, that it would be rather strange if this court should say that in view of the facts as to this company, this board, that has been maligned as It has been here, has been gullty of actual or constructive fraud. Notice the record here in this case. That ehows an absolute compliance in the re- ports filed, and there was no demand to as- sess the franchise, and as none existed, It would have been foolish. Mr. Howe—If the court please, Mr. Ran- som I suppose desires to get away. He has taken up ten minutes extra time and I will simply reply to that and indicate a de- felency in the proof, 8o he may supply that I he desires to, if the court will not take it out of my time. It is fair to him to re- | spond to him now if the court will permit 1t. Mr. Ransom—Of course there has been nothing sald on either side about this com- Fany except the reference to Poor's Manual, except what has been sald in,the brief, which of course does not cut much figure at all. Mr. Howe—Then, if the court please, I will say in the first place, all the proof here s the “return” of the company under the statute, which gives the great right to have assessed the property of the transpor- tation companies and which takes away the right from the local assessors to assess traneportation companies and places it in & state board, for some reason which they seem to value very highly. The gentleman has not Introduced the charter of the company, nor has he intro- duced the contract under which the cars of that company are moved over the soverelgn state of Nebraska, by reason of which those cars become valuable. They are moved by some franchise and, prima facle, their re- turn to the board says they are a transpor- tation company. If Mr. Ransom wants to bring in the charter of this company and 1so the contracts he makes with these rail- road companies, he may do it. We want the whole truth, and mot a part of the truth. As the record now stands, we have a prima facle case agalnst them. What does this authority say, Poor's Manual? It says the Pullman company was incorporated under the laws of the state of Illinols February 23, 1877, for the purpos of operating sleeping and parlor and other cars and of manufacturing all kinds of par- lor cars. Just what I thought. “Operating” as well as manufacturing. Now, if the court please, no protest, they say, was filed before the board. None was needed. That tully answers that. Now, we do kmow by their own report here that this company's cars and rolling stock, peculiarly railroad property, have been moved for thousands and thousands of miles over the territory of this state every week and have recelved the protection of this state. Now, then, it is the equipment of the Pullman company, as an’ operating company, entitled to come here and do & transportation business under our comity, or it belongs to the equipment of some other transportation company. They have not shown us. This property must be sed as property under that greatest of all franchises in private hands—a transpor- tation franchise! It is not mere wood and paint. Their own agents stay in those cars and sell their tickets. They have our pro- tection. They are thus moving over this state and it won't do for them to say they Insanity Due to Nervous and Mental Troubles PAINE'S CELERY COMPOUND The Great Tower of Safety and Rock of Health in the Hot Weather. Nervous diseases when aggravated by mental disturbances produce more causes of insanity in the hot weather than at any other season of the year. Nervous head- ache, nervous dyspepsia, sleeplessness and chronie constipation induce depression of spirits, extreme weakness, mgrbld fears, despondency and languor, irom these, dread insanity comes slowly but surely. Nervous sufferers have a dread of hot wenther. Finding themselves deeper in the pit of misery than they were in the epring and early summer, they are in utter despalr. There is hope for you, dear reader, it you are one of the sufferers. You stand in need of Paine’'s Celery Compound, that great bullder of the nervous system. Its vitaliz- ing actlon commences with the first bottle you use. The volume of blood immediately increases in the arteries, and the body 1s tully fed and nourished. Your appetite b comes regular and natural, the nerves and brain are strengthened, and you have im- pulses of health that cheer the soul. This remarkable remedy will truly meet your case and glve you a new life; it will lay the foundation for happiness and long years. We counsel you to try this marvelous summer health-restorer at once, and enjoy the blessings of health. —_— that {s what they sent me. It got here last night after adjournment. Mr. Howe—I will on this condition, then, it you will bring in the contract you make with these rallroad companies. Mr. Ransom—I will not ask you, then. T will ask the court to allow me to introduce this. I desire to ask the court to allow me to introduce & copy of the charter of the Pullman company; it i not certified to; it 1s a very short paper, and whether it is & true copy or mot can be verified by the clerk by examining the special acts of the state of Illinols in the library. Mr. Harrington—It does mot dispute the proof that it is also an operating company. Chlef Justice Sulllvan—The copy of the charter will be recelved in evidence. Mr. Howe—We ask that the contracts be offered in evidence also. Mr. Ransom—I haven't them. BELLEVUE BOY SENTENCED Morris McDermut Must Serve for Forgery in Buffalo, New York, Time BUFFALO, N. Y., July 18.—(Special)— Morris McDermut, who says he is the som of W. B. McDermut, mayor of Bellevue, Neb., has capped the climax of an adven- turous life for one so young, by belng sen- tenced to the Elmira reformatory. Judge Emery of the county court of this county sent him to the reformatory on his plea of gullty to forgery. McDermut, who also apells his name Mo- Dermott, {s 21 years old. He left his father" home at the time of the Spanish-Americas war, enlisted In the army and'saw servies at El Caney and Santiago. Some months ago he came to Buffalo. He joined a church here and one of the churchmen gave him employment. The labor was of the manual order and McDermut quit it to go In the ticket brokerage busine He had some knowledge of printing and with his partners, Joseph Kelly and Jam E. Moore, he evolved the scheme of alter- ing tickets, thereby greatly Increasing thelr value. The firm would buy tickets to a mearby station, reading “Buffalo to via.” By means of acids and a print- ing press they would change these tickets to read “Buffalo to New York.” Batavia tickets could be bought for 80 cents. The firm sold the New York tickets at scalper rates for $7.50. They did such an Immense business that the New York Central rafiroad employed detectives to discover the gang of forgers who were changing the tickets. The brokerage office on Exchange street, this city, was raided and the printing pre and numerous tickets were selzed. McDermut and his companions pleaded gullty to forgery in the third degree. It reported that McDermut was the lead- ing spirit In the gang and when he was arralgned for sentence it was the intention of Judge Emery to send him to Auburn state prison, but owing to his military service and the fact that no previous con- viction could be brought up against him, this was changed to an indeterminate sen- tence to the reformatory. He says that his father has a pretty home at Bellevue, where he Is highly respected. McDermut says he lived for awhile In Omaha. Choler This bas long been regarded as one of the most dangerous and fatal diseases to which infants are subject. It can be cured, however, when properly treated. All that is necessary i8 to give Chamberlain's Colic, Cholera and Diarrhoea Remedy and castor ofl, as directed with each bottle, and a cure is certain. Application for Recelver. HOUSTON, Tex.. July 18.—Application has been filéd in the United States court for the eastern dlatrict of Texas for a re- celver for the well companies which have their lands and welly in the Veatch League in the Beaumont ofl flelds. Annie Trench and Frederick Trench of England are the applicants. They have heretofore flied suft to test the title and now allege that t ofl is belng removed to thelr great loss. The application is set down for hearing July 28 before Judge Bryant. A Word to the Wise When you have a thirst for something delicious, wholesome and refreshing are simply & manufacturing company and offer no proof. If they are a manufacturing company, that law is unconstitutional. Manufacturing companles are not assessed by the state board. They have to take thetr medicine with the rest of us with the local amsessor. Now, if the court please, this sufficiently shows that the Pullman company s here, and is in it, and up agalnst the real thing, after all these years, as it should be, and as these transportation companies should be, and as these main transportation companies are! They have beld the people of this state up against the real thing for & whole generation; let them take their medicine! Mr. Ransom—W1ll you admit an uncerti- fled copy of the charter? You can verify it in the library. Mr. Howe—It you will say it is & true copy of their charter, y Mr. Ransom—I will uy'l asked for it and try BOSE'S Lime Juice It is the product of the choic- est West Indian Lime Fruit, and has won universal approval as the best temperance drink and an excellent blood purifier. Ask your grocer or drug- gist for it and insist on having ROSE'S,